Acroud publishes Year-End Report 2020: The pieces fall into place and intensified acquisition focus

Fourth Quarter 2020

• Revenue amounted to EUR 2,497 (3,285) thousand.
• EBITDA amounted to EUR 1,292 (1,914) thousand. Adjusted EBITDA (before items affecting comparability related to acquisitions, reorganisation, compensation from litigation and new share issues) was EUR 1,023 (1,914) thousand.
• Profit after tax was EUR -685 (610) thousand. Adjusted profit after tax (before items affecting comparability and currency effects) was EUR 94 (1,193) thousand.
• Earnings per share after dilution amounted to EUR -0.008 (0.008). Adjusted earnings per share (before items affecting comparability and currency effects) was EUR 0.001 (0.016).
• New Depositing Customers (NDC) increased by 3% (-17%).
• Cash flow from operating activities amounted to EUR 958 (1,765) thousand

Full Year 2020

• Revenue amounted to EUR 11,630 (14,302) thousand.
• EBITDA amounted to EUR 5,492 (8,357) thousand. Adjusted EBITDA (before items affecting comparability related to acquisitions, reorganisation, compensation from litigation and new share issues) was EUR 5,782 (8,357) thousand.
• Profit after tax was EUR 1,256 (4,934) thousand. Adjusted profit after tax (before items affecting comparability and currency effects) was EUR 2,992 (4,219) thousand.
• Earnings per share after dilution amounted to EUR 0.016 (0.065). Adjusted earnings per share (before items affecting comparability and currency effects) was EUR 0.038 (0.056).
• New Depositing Customers (NDC) declined by -18% (-19%).
• Cash flow from operating activities amounted to EUR 5,765 (8,157) thousand.
• The Board recommends that no dividend be paid for the 2020 financial year in order to prioritise growth initiatives

Significant event in the quarter

• The Company’s board decided to accelerate implementation of the growth strategy with the aim of responding more proactively to future growth and acquisition opportunities. The Company intensified the acquisition focus and its two largest shareholders have backed the growth strategy.
• In October, the Company issued an update on the results for Q3 2020 and at the same time announced that it had entered into a Letter Of Intent (LOI) regarding the acquisition of a fast-growing lead generation company within Sports Betting. In early November, a letter of intent was signed regarding a potential acquisition in the United States within Sports Betting.
• In November, Acroud carried out a private placement comprising 35,294,118 shares at a price of SEK 2.55 per share, corresponding to approximately SEK 90 million in allocated demand. The issue enables the Company to implement the growth strategy and act quickly when attractive acquisition opportunities arise. At the same time, the Company’s financial position was strengthened.
• In November, Acroud completed the first acquisition within Sports Betting in connection with the letter of intent announced in October 2020. The acquired business is a fast-growing lead generation company within Sports Betting, well positioned for emerging markets such as Latin America, Africa and Asia. The acquisition is expected to accelerate the Company’s growth in strategic focus areas such as Sports Betting and Emerging Markets.
• In early November, Acroud signed another letter of intent, this time for the acquisition of PMG Group, in order to strengthen its strategic position in the market. PMG is a fast-growing company, predominantly active in the European market with the affiliate network Matching Visions and the iGaming campaign broker Traffic Grid, but is also an industry-leading SaaS service provider with Voonix.
• In December, the Company was granted a licence to operate in Michigan, which was regulated in January 2021, and includes Sports Betting, Casino and Poker.
• At the end of the quarter, Acroud obtained bondholders’ approval regarding certain amendments to the terms and conditions of the outstanding senior secured bond loan. The approval meant that the majority owner Trottholmen may own less than 50% of the shares in the Company.

Significant events after the quarter

• Acroud acquired the assets of Power Media Group, consisting of Voonix, Matching Visions and Traffic Grid, in order to strengthen its strategic position in the market. The target companies are fast-growing companies, mainly in the European market with the affiliate network Matching Visions and the performance marketing company Traffic Grid, but are also an industry-leading SaaS service provider with Voonix. During 2020, the target companies generated revenue of EUR 9.6 million and EBITDA of EUR 0.9 million.
• After the end of the period, the Company obtained a licence to operate in Pennsylvania, which is already a regulated State. At the same time, Michigan, where Acroud already has a licence, was regulated, which means that Acroud can run Sports Betting, Casino and Poker affiliate operations in both states.
• After the end of the period, the Company has convened an EGM in order to launch a comprehensive share option programme for employees. The employee share option will cover 30 employees and will run for three years until March 2024. The EGM will be held on 1 March 2021.
• After the end of the period, the Company has signed another letter of intent for the acquisition of a European-based media company within Sports Betting (“the target company”). The target company is a fast-growing company that offers both a software-based “gaming tips” service and highly popular streaming channels within Sports Betting, Poker and Horse Racing. The target company has a clear strategic fit with Acroud, whereby we strengthen our software offering (SaaS), while adding some of the most popular media channels, YouTube and Twitch, to our offering. The target company generated annual sales of approximately EUR 1.4-1.5 million, based on the 9-month period Q3 20-Q1 21, with an EBITDA margin of about 60%, resulting in annual EBITDA of EUR 0.9-1.0 million. The agreement includes a total initial purchase consideration of approximately EUR 5.0 million on a cash and debt-free basis, and an additional consideration which is contingent on EBITDA in 2023. The acquisition is still conditional on a final board approval and that the parties enter into a final purchase agreement. The goal is for the transaction to be completed in the first half of 2021. The purchase price is planned to be settled 50% in cash and 50% in newly issued shares in the Company.

VD-comment: A challenger on a quest, going through changes

Who is this challenger called Acroud? And which quest are we on? To answer these fundamental questions, let us look back and reflect before we look to the future.

It’s now almost a year since I had the privilege to be appointed CEO of Acroud, and we started the journey to create “the Media House of The Future”. This year has been a very eventful year to say the least, especially on a global level as everyone is aware. But let’s focus on the Company. The Company has, in high speed, transformed from its old mindset towards being an entrepreneurial forward leaning company. It is now “A crowd” of brilliant minds and a company with a unique position on the market. The year has been characterized by intense change management work where we have rebuilt the company in rapid pace including secured refinancing, raised new capital, changed the company name to Acroud, built a strong team with profound industry experience, executed strategic acquisitions, etc. Consequently, there has been a major shift in strategy to be more offensive, creating a company prepared for strong future growth.

Trend shifts in the fourth quarter…

Financially 2020 has been a challenging year where revenues and margins have decreased much related to regulative effects, and it is also an effect of the historical strategy. When starting as CEO I expected it to take around 12 months before we would see some initial fruits of the change management work. Therefore it is extra gratifying to see the current trend shifts at the end of the fourth quarter such as:

• NDC levels are increasing quarter on quarter more than doubling, in part driven by acquisitions
• REVENUE increasing 5% quarter on quarter reaching 2,497 kEUR
• ADJUSTED EBITDA increasing 7% quarter on quarter reaching 1,023 kEUR

We can be proud of this progress, even though in all honesty, it does not matter in grand scheme as the financial figures are just “a captured moment in time” that is behind us already. Remember “better is only temporary”, because tomorrow we will be better than today.

If we look at the last quarter and the period up until now, it becomes far more exciting as this has been an especially eventful quarter, in which many pieces of the Acroud puzzle have fallen into place.

Pieces in the puzzle falling into place…

During the last quarters a new more offensive growth strategy has been implemented to build the platform for growth and creating a unique company on the market.

We raised 90 MSEK with a new share issue strengthening our balance sheet and enabling us to create the new position on the market through strategic acquisitions. In connection with the new share issue we also welcomed several new investors to Acroud making us even stronger. With parts of the funds we completed the acquisition of the companies in the Power Media Group (“PMG”) and the assets in RIAE Media. RIAE Media and the Power Media Group are transformative acquisitions being important pieces in the puzzle turning Acroud into something new. Acroud’s vision is to create value and enable content creators (for instance bloggers, youtubers, affiliates, etc.) to monetize on their work with new tools and new business. To clarify this in the best possible way. Media and information is created and consumed, as well as monetized in fast, new and ever changing ways. Therefore, we have a vision to build “The Media House of The Future”, which in fact is a vision we will never reach even if we do things right because as I said, better is only temporary. Consequently we enable businesses to thrive and acquire consumers through entertaining and trustworthy content.

Through the acquisitions we have transformed to a more diversified company with several different revenue streams. In fact we have created a company adapted for strong growth with significantly lower risk profile than earlier. Through RIAE Media we have strengthened our Sports Betting vertical and gained traction on both Emerging Markets and the US. Through Power Media Group we get profound industry knowledge and a strong team with totally new revenue streams and products.

Looking to the future, we still have some pieces of the puzzle to put in place via additional acquisitions and continued development of the underlying business, which is something we are currently working on. However, the pieces are falling into place as I would like to give a flavour of what we are creating below.

At your service…built on three strategic pillars.

The new Acroud that is being created is based on three strategic pillars creating growth and value for the shareholders.

The first Pillar – Affiliate Business. This is our underlying affiliate business containing the Poker, Sports Betting and Casino verticals. In the affiliate business we operate websites generating traffic for the operators. We are providing content and we can through the acquisition of PMG utilize the SaaS and BaaS solutions to increase the underlying growth and profitability in the affiliate business. In other words there are significant synergies within this field.

The second Pillar – SaaS Business. There is a lot buzz around “Software as a Service” (SaaS) and through the acquisition of the assets in PMG we are from this year also a SaaS company. But we are also more than that. Let me explain. In line with our vision of providing a way for “content creators” to better monetize their work, we now offer two sets of software solutions, one being Voonix which is an industry leading data collection tool on the affiliate market. The other being Affhut, allowing whoever wants to build and create their own network of content creators.

The third Pillar – BaaS Business. We can now also offer what we would like to call “Business as a Service” (BaaS), which is Matching Visions. Matching Visions gives the media creators (for instance bloggers, youtubers, affiliates, etc.) access to a much larger client base, unique software and business terms, otherwise out of their reach. Predominantly this currently means that thousands of smaller iGaming affiliates around the world come together, via Matching Visions, to provide traffic and new players for online gaming operators. In other words Matching Visions makes life easier for both operators and affiliates. Simply put, Business as a Service.

Going forward we will, through horizontal expansion, expand our BaaS and SaaS offerings outside the iGaming industry. There are huge potential and upsides down the line in this field.

Continued expansion in the US

We continue on the track with focus on the US market reaching 20% of revenues in North America in the fourth quarter. We are seeing increased traffic driven by the Poker vertical while we have recently been awarded licenses in large states such as Michigan and Pennsylvania. We also expect to get licenses within short in Illinois and Virginia.

Some of our sites are gaining traction and are ranking well in the fourth quarter leading to larger opportunities to grow organically within Sports Betting, Casino and Poker. We are currently evaluating our different growth initiatives in the US to find the right balance between organic growth, partnerships with Media Houses and executing possible strategic acquisitions.

Back to land-based gaming events, why?

The logic behind facilitating gaming events is clear. We strengthen our position within Poker, we create buzz and a lot of high quality content, which will help our flagships, such as Pokerlistings.com and CompareCasino.com to grow even further. We also assess that the gaming events will generate positive EBITDA already from the first event besides from all other synergies which are generated.

The first stop for our events named “Thefestival.com” will be in Tallinn in June 2021, depending on the COVID-situation. This is the first in a series of poker & casino events facilitated by Acroud in amazing cities worldwide. It combines the best of poker and casino - all in one scene.

Our first stop will introduce competitive roulette & blackjack tournaments alongside various poker formats our players know and love.

Entering the streaming market with full force and signed LOI

We are entering the streaming market building a new brand that will be our new streaming network. This will unite the iGaming streaming community “under one roof” and offer an “all-in-one service” to any streamer looking to grow their channel.

We have teamed up with some big international streamers and this together with unrivalled technology and industry knowledge will be a “Game Changer” for Acroud. The streamer business will be rolled out during the first quarter of 2021. It’s natural for us to start the roll-out within iGaming, but we are looking forward to bringing this business to other verticals such as e-sports.

We are fully convinced that streaming high quality content is a vital part of the future development of our industry and many other verticals within the media sector. The classic “affiliate comparisons sites” still have their target audience, however this type of high-quality content reaches beyond that. In line with this market development we have just also signed a LOI to acquire a European based media company within Sports Betting (“The Target”). The Target owns and operates some of the Europe´s best video channels within Sports Betting, Poker and Horse Racing. The Target also develops SaaS solutions within Sports Betting which makes them a “strategic fit” to Acroud and an important piece in the puzzle. In addition, the Target has shown a history of strong growth and at the same time we see many synergies in the future. The acquisition is still conditional on a final board approval and that the parties enter into a final purchase agreement.

In Summary, the pieces in the Acroud puzzle are falling in place to build “The Media House of The Future” and we are prepared for solid growth. You can expect us to continue to keep our rapid pace, invest wisely and challenge the status quo. As we all know the only constant in life is change.

So…

Join The Ride

Robert Andersson Malta, 18 February 2021

CEO Robert Andersson and CFO Gustav Vadenbring will present the Year-End Report, followed by a Q&A session. The presentation will be held in English and will be webcasted live through www.acroud.com or via https://tv.streamfabriken.com/acroud-q4-2020

The join the conference via phone, please dial-in using any of the numbers below:

From Sweden: +46850558373
From UK: +443333009031
From the US: +18335268380

The webcast and the presentation slides will be published on www.acroud.com after the webcast, where you also can view and listen to the webcast on demand.

Responsible parties

This information constitutes inside information that Acroud AB (publ) is required to disclose under the EU Market Abuse Regulation 596/2014. The information in this press release has been published through the agency of the contact persons below, at the time specified by Acroud AB’s (publ) news distributor Cision for publication of this press release. The persons below may also be contacted for further information.

For further information, please contact:

Robert Andersson, President and CEO
+356 9999 8017

Gustav Vadenbring, CFO
+356 9967 6001

ACROUD AB (publ)

About ACROUD AB
ACROUD owns, operates and develops high-quality comparison sites, mainly in iGaming affiliation, for the purpose of helping our partners by channelling high-quality users to the Company’s customers – primarily iGaming operators. Through the sites, ACROUD generates high-quality users, primarily to global iGaming operators. The Company, which was founded in 2003, has just over 70 employees and is headquartered in Malta. The share (ACROUD) is listed on Nasdaq First North Growth Market. Certified Adviser: FNCA Sweden AB, info@fnca.se, +46 8 528 00 399

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